Anyone have any thoughts as to what MS will do with the $300+ million sitting in the coffers.
If I were he, I'd be looking at Paladin's Langer Heinrich in Namibia. Paladin paid $250 million right before Fukushima and is now hurrying to get cash to pay a $300 million convertible note coming due. I'd bet you that MS could scoop it up for around $100 million cash. The WSJ recently called it the third best conventional uranium mine in the world.
Spot uranium prices are terrible right now, but I'm guessing that they'll turn around fairly soon. It's fairly easy to project the coming demand because nuclear reactors have such a long lead time. The earlier overhang -- the Missiles to Megawatts Program -- is now no more. I'm thinking that this deal is just his speed.
That might make sense a little in the future. Right now, didn't shareholders just turn over that cash to him a couple of years ago through a rights offering? He collected the money and hasn't yet done anything with it. My feeling is that might be the trouble. He's been sitting on the dead money for a good while, and not yet put it to use. For a good while, I thought that cash was hardly sufficient to accomplish much. Now, I don't think so any longer. The idea that he could buy a premier potash or uranium asset due to the depressed prices.
Clearly, this is all about the long game. Those who are thinking that the price should reflect book before Compton starts generating cash are crazy. MS always talks about book value, and clearly he is the one responsible for creating this false hope. But the purchase is a long way off from being fairly evaluated. If and when it starts to produce lots of cash, then it will be reflected in the share price.
I'd guess that there might be available distressed potash assets since the potash cartel collapsed. The future of the price of potash is a little bit less clear going forward though.
Or if Tullow strikes oil on Hyperdynamics exploratory block, I bet MS might be able to complete an asset purchase at a firesale price since HDY would need to sell under the taint of an FCPA investigation.
Perhaps I am barking up the wrong tree, and MIL doesn't want any party of the country risk to be had in Namibia or Guinea.